Summations Only

What's the point of having a separate term'value in trade'if you're just going to equate it with a term that already exists'price'?Edited by Jon, : No reason given.

And to prevent any further ambiguity, confusion or dissent, you could use the term price instead of value, since that is apparently what you mean by it.Unless, of course, the creation of ambiguity is necessary to your argument.

You say this as if it was just me, but it isn't. I'm using the same view of value and price as mainstream economics. I've quoted from a number of articles describing this or very similar views of value and price, and none of them consider the terms to refer to the same thing. I recognize that the use of the word "equate" by one of the articles seems to imply otherwise, but they're using "equate" in the sense of a relationship rather than an equality.Value and price are not synonyms. Value is a sense of what something is worth in terms of some measure of value, usually a currency like dollars. The more someone values a good the more they'll pay for it. Price is what is paid when a good changes hands.Here's an example of a possible way to obtain an aggregate measure of value for a region that I described to Crash in Message 210. In a small community of 3 supermarkets that don't use promotions the price of a bag of peas is $.90, $1.00 and $1.10. During a given week the supermarket sales are represented in this table: The lower the price relative to value (the price/value ratio) the more likely it is someone will buy a good, or the more of it they will buy. Conversely, the higher the price relative to value the less likely it is someone will buy a good, or the less of it they will buy.Advertising can influence perception of value, making it more likely a good will be purchased. For example, Chevy truck ads attempt to raise the perception of their value in consumers minds in order to make it more likely they'll buy Chevy trucks instead of Fords.--Percy

The beneficial economic effect is indeed reflected in productivity gains, company profits and thus GDP. We all agree on this. It is who these gains are being received by that is the issue. Thus the benefits of increased productivity end up in the hands of those who own rather than those who contribute to wealth creation through innovation or activity. Because the methods of accounting put the emphasis on ownership to the exclusion of near all else.Which means the wealthiest are receiving more wealth than they can claim to be creating and thus wealth is trickling up rather than down.That's the point.

You are just conflating cost and value at ever greater length and in ever more contrived ways.I want to know what the value to the US economy is of having an educated, rather than an uneducated, population.More specifically I want to know what the return is on the investment made in educating people at public expense over the last 30 years in terms of the effect this has had on the productivity (and thus GDP) of the United StatesCan you show me where I can find this information on your balance-sheets?

So does "value in trade" mean "average price within a region"? So ... if by advertising Chevy only increases their volume of sales, while leaving the price of one of their trucks the same, have they increased the "value in trade" of a Chevy truck?

No, you're wrong, we agree on that, too. Wealth from all sources, including productivity gains, is becoming increasingly concentrated at the top. The methods of accounting cannot be anything but what they are because of the requirements that the plus and minus sides of the ledger have to balance. Let's not add accounting to your confusion about who created wealth belongs to.When you work for yourself the wealth you create belongs to you. If you make a chair in your wood shop and sell it for $100 then the wealth you create is $100 minus the cost of materials and any other expenses.If you decide to instead make chairs for a company who pays you $25/chair then the wealth you create is $25/chair. You agreed to that valuation of your labor when you took the job. If the company sells the chairs for $100/chair then the wealth the company creates is $75/chair. That $75/chair is not wealth you created, it is wealth the company created. You contributed labor to the end result of selling the chairs for $100/chair just like everyone else in the company, but none of you have any right to that created wealth. That created wealth belongs to the company. (AbE: In reality, of course, the wealth the company creates is $100/chair minus expenses, which includes your $25/chair salary plus all other expenses - in other words, created wealth is the same as profits)Does anyone here think the wealth you created and that is rightfully yours should actually be $100/chair, which would be the $25/chair they're paying you plus the $75/chair additional in the sales price? To those who think so then consider the contributions from other parts of the company. The purchase and delivery people bring you the raw lumber, you no longer have to fetch that yourself. The maintenance people maintain and repair your machines, you no longer have to do that. The company's purchasing department buys the machines, you no longer have to do that. The company owns the building with the shop floor, you don't have to maintain a workshop anymore. The janitors keep the workshop clean, you no longer have to use your time sweeping up sawdust and so forth. The sales and marketing departments handle advertising and relationships with retailers, something you no longer have to do if you ever did. The delivery people transport the chairs to retail establishments, something you no longer have to do.What the company has made possible in this case is specialization. You're a craftsman, and now all your craftsman skills are being dedicated to your craft, which is making chairs. You no longer have to drive around buying lumber and delivering chairs, you don't have to fix and maintain your machines, you don't have to clean the shop, you don't have to pay a mortgage on a building, etc., etc., etc.The company takes advantage of specialization in all other areas. People who are good at driving but not at making chairs can drive. People who are good at cleaning but not at driving can keep the building clean. People who are no good at cleaning but are good at making pitches can market and sell the chairs. People who are not particularly good at any of this stuff but are good at organizing and leading run the company.Company's own the profits from their efforts because they do the work of bringing together and coordinating all the people and infrastructure necessary to producing a product.Everyone gets a salary, and how the company's money is divided among the employees is decided at the Board of Director level, not specifically of course, but generally. They need the salaries they pay to be competitive, but they don't want to overpay. Rapidly increasing salaries for those at the top versus stagnating salaries for those outside the top is a result of competitive pressures. Companies who are able to maintain a competent workforce at a given salary level are not going to increase salaries, particularly in the highly competitive markets we see today.But apparently top flight talent for running companies is in short supply, and so salaries for company officers keep rising and rising. I can only speculate about why that is. I think it is partly an old-boy network type of thing, that they're all rich and sit on each other's boards and keep voting each other increasingly extravagant salaries. There may also be a perception thing going on, where they're perceiving value in talent that isn't really there.--PercyEdited by Percy, : AbE.Edited by Percy, : Grammar.

You're confusing "value" with "market-clearing price." Perception of value? Under your model, more people buying Chevy's would raise the price of a Chevy (higher demand), and you would be forced to conclude that the real, not just apparent, "value in trade" of a Chevy had increased.So I don't understand on what basis you would claim that advertising can influence perception of value. Under your model, you would have to conclude that successful advertising actually does increase the value of the item advertised.

Bingo.--Percy

Well, ok, "bingo", but what you said was "perceived value", not "actual value."

Hi Crash,Yes, I'm talking about perceived value, not actual value. Here's the Wikipedia paragraph I provided about actual value once before, the one with the example of the $100,000 book: Actual value in this sense plays no role in anything I'm saying, and I don't view actual value as a useful concept, or at least I can't think of a context where I would find it useful.Perceived value differs from individual to individual, and will vary over time for each individual. Everyone experiences these facts everyday. You buy a particular snack that your friend says you would have to pay him to eat, showing that different people have different perceptions of value. Or let's say you think TGI Friday's is a terrible restaurant, but then you see an ad on TV that changes your mind, or maybe a friend tells you about their new menu or perhaps just a new menu item, and your perceived value of TGI Friday's rises.--Percy

Well, ok, except that you "bingo'd": I'm at a loss, I guess, and you're certainly not doing anything to insulate yourself from the charges that you're playing fast and loose with the definition of the word "value."

Have I said differently? The confusion here is yours and it pertains to who is creating wealth. I am simply saying that the wealthiest are receiving more wealth than they are creating and thus wealth is trickling up rather than down.The accounting view you are advocating as the be-all-and-end-all measure of economic value gives a warped and unrealistic view of wealth creation. If we simply look at wealth creation from this purely accounting perspective we will conclude that those who benefit from productivity gains and those who are the "wealth creators" are necessarily one and the same. Because in accounting terms the ownership of increasing assets is what qualifies as "wealth creation". Thus if we want to create wealth in society and we are too blinkered to see beyond accounting restrictions we would conclude that focusing financial resources at the wealthiest is justified because they are the "wealth creators". This is of course the flawed premise behind trickle down economics.However if we look past simplistic accounting we will conclude that focusing resources on those that cause productivity to rise and assets to appreciate is the way to best create wealth. Focus it on those who innovate, educate and act in other ways that significantly improve productivity.The problem is that this doesn't fit neatly on a balance-sheet. I don't know (for example) what value the invention of the microchip has added to the world economy. I doubt that on any company balance-sheet you will see a figure pertaining to "productivity gains as a result of using microchip technology". But the idea that the use of microchip technology hasn't boosted productivity and added value to the economy simply because it isn't listed as an item in this way is absurd.Conflating the necessities of accounting with the realities of wealth creation is a road to nowhere but plutocracy. In a capitalist economy where productivity gains are allocated on the basis of ownership to the exclusion of all else this is all but inevitable. Without some form of re-distributive counterbalance the sort of malfunctioning, plutocratic, undemocratic, monopolistic, too-big-to-fail, socialised-risk-privatised-profit capitalism we have today is going to happen.

I'm not the one who defined value as used in mainstream economics. I'm just the one trying to explain it. If I'm doing a botch job of explaining it then visit a couple webpages and help me get the explanation right.One webpage that might help is the Wikipedia article on Subjective Theory of Value which begins: It continues with something I quoted earlier: This is the concept of value I'm trying to explain. It's also the one I've always held. If my explanations have varied it is only because there's no point repeating explanations that have failed previously. I've never forgotten the grad assistant I once had for a course who when he had trouble explaining something would keep repeating the same explanation in the same words in a louder and louder voice until we stopped asking questions. This made clear to me very early in my career the importance of seeking new ways to explain things until something clicks.Another source of confusion is that people often use the words value and price interchangeably, even in economics discussion except where the distinction is significant.--Percy

Then you might want to step back, look over your posts in this thread, and think about why everybody who reads them comes away believing that you're explaining that value is an identity of price. "People"? You're the one that's doing that. The rest of us are trying to explain to you why "value" is not the same thing as "price."